Online Gambling's Dirty Word

Until the word "cannibalization" leaves the conversation, online gambling legalization will continue to struggle.

One word will dominate online casino legalization discussions for the foreseeable future: Cannibalization.

Whether they’re cannibalization truthers or deniers, there is ample evidence to support either point of view.

But, as I’ll explain at the end of this column, it’s a word that needs to be retired. The word itself is the problem.

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From a Certain Point of View

One side approaches the debate from a macro perspective and the other from a micro perspective.

Yes, following the introduction of online gambling, markets generate more revenue. Some casinos hold steady or increase their land-based revenue, but some don’t. As Wynn CEO Craig Billings said, “As an operator, the TAM doesn’t pay my bills, my share of it does…”

Setting aside conflicting reports on the topic, there is mounting evidence supporting the reality of cannibalization. The July numbers from the Big-3 online casino states are going to be difficult to counter:

Yes, this is one month in a very volatile industry, but the trend is plain to see. Online revenues are growing, and land-based revenues have been stagnant or in decline throughout 2024.

And as iGaming Capital Founder Melissa Blau said at the SBC Summit, “The numbers are not the numbers… Stakeholders should look more holistically at revenue totals and not just pick aspects that fit their narrative.”

*I have not included Michigan revenue as the market is a mix of commercial and tribal casinos.

We can certainly be the dog-surrounded-by-fire gif and say, “This is fine,” but it’s not. We can also scream, “Correlation doesn’t equal causation,” but it’s hard to ignore that one sector is growing at a double-digit rate, and the other is flat.

And as I mentioned in last week’s feature column, “Intuition overrides evidence when evidence isn’t overwhelming.”

Meaning:

“Supporters of legal online casinos will have to convince opponents beyond a reasonable doubt that it will be a positive addition. There’s no wiggle room. This isn’t a civil case, where the threshold is typically five out of six jurors believing it is more likely than not (a preponderance of the evidence).”

 One of those convincing is Cordish Gaming Group President Rob Norton, who said he believes online cannibalizes land-based gambling by 15-23% when you factor in food and beverage and other ancillary revenue streams at the SBC Summit North America.

“I know there are a ton of studies out there, and everybody leans on a different study that supports their narrative,” Norton said during a keynote address. “Well, I didn’t do it that way. I did the studying myself with my own team without an objective, without an agenda.”

According to Norton, “When digital turned on [in Maryland], 65% of our revenue from sports betting vanished overnight, which affected our restaurants, our bars, but most importantly, our table games and slots.”

How can you argue against that? And how do you provide him with overwhelming evidence to change his opinion?